by Maurie Backman | May 4, 2021
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I don't like owing money, but my mortgage debt doesn't bother me.
Some people don't mind being in debt, but I'm not one of them. Having debt hanging over my head has always really bothered me. In fact, the idea disturbs me so much that I've made sure to never carry a credit card balance.
But there's one type of debt I have that actually doesn't worry me at all -- my mortgage. Here's why I don't find mortgage debt bothersome.
Too much credit card debt can damage your credit score, even if you make your minimum monthly payments in a timely manner. Mortgage debt, on the other hand, doesn't hurt your credit score as long as you make your payments when you're supposed to. Knowing that, I don't get stressed about this type of debt. In fact, through the years, I'd say my mortgage has actually helped my credit score.
By paying off my mortgage, I'm working toward an important goal -- owning a significant asset that has the potential to increase in value over time. Other types of debt don't offer the same benefit. In the past, I've taken out auto loans to finance cars, and while paying them off felt good, it's hard to overlook the fact that vehicles decrease in value over time. But homes are more likely to appreciate in value, so it's easy for me to feel good about paying for one.
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Back when my husband and I bought our home, we made the decision to stay well below the top end of our price range. That was over 10 years ago. Thankfully, since that time, our income has increased -- yet we haven't moved because we like having a mortgage payment that fits easily into our budget. Of course, we'd love it if our mortgage payment were to magically go away. But by being conservative with our home purchase and making a larger down payment, our mortgage doesn't strain our income.
A lot of people carry debt as a matter of course, but remember, not all debt is created equal. Mortgage debt can be healthy provided you don't take on more than your income can handle. If you're not sure how much house you can afford, use a mortgage calculator to run some numbers. Keep in mind that your predictable housing costs -- including your mortgage payment, property taxes, and homeowners insurance -- should ideally not exceed 30% of your take-home pay.
You may end up having to pay off your home over a very long period of time, so it's important that your mortgage not stress you out. And if yours is already a source of anxiety, you may want to look at refinancing, as doing so could lower your monthly payments and ease some of that burden.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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